South Carolina does have a state income tax

South Carolina taxes income earned by residents and nonresidents who work in the state. The tax applies to wages, self-employment income, investment returns, and retirement distributions. Unlike some states, South Carolina does not offer a flat tax rate — your rate depends on your income level and filing status.

The state uses a progressive tax system, meaning higher earners pay a higher percentage. Tax rates range from 0% on the first portion of income to 7% on the highest brackets. The exact amount you owe depends on your total income, deductions, and credits you may be may have access to to claim.

Key Takeaways

  • South Carolina taxes resident income at rates between 0% and 7%, depending on your income bracket and filing status.
  • You must file a South Carolina return if you earned income in the state or lived there for the full tax year, even if you also file federal taxes.
  • The state allows deductions for federal income tax paid, retirement contributions, and certain other expenses that reduce your taxable income.
  • South Carolina offers tax credits for dependent children, education expenses, and property taxes that directly reduce the amount of tax you owe.

How South Carolina's tax brackets work

South Carolina's income tax brackets change each year based on inflation adjustments. For the 2024 tax year, the state has seven tax brackets. A single filer with income under a certain threshold pays 0%, then moves into higher brackets as income increases. The top rate of 7% applies only to income above the highest bracket threshold.

Your filing status — single, married filing jointly, married filing separately, or head of household — determines which bracket your income falls into. A married couple filing jointly reaches higher income levels before hitting the top rate than a single filer with the same total income. The South Carolina Department of Revenue publishes updated bracket amounts each January on its website.

Brackets are not the same as your overall tax rate. If you earn $50,000 as a single filer, you do not pay 7% on all of it. You pay the lower rate on the first portion, then progressively higher rates as you move through each bracket. This is called your effective tax rate — the actual percentage of your total income that goes to taxes.

Who must file a South Carolina tax return

You must file a South Carolina return if you lived in the state for the entire tax year and earned income above the filing threshold. The threshold varies by age and filing status. A single person under 65 with income over roughly $3,500 to $4,000 (the exact amount changes yearly) must file. A married couple filing jointly has a higher threshold, typically around $7,000 to $8,000.

Nonresidents who worked in South Carolina during the year must also file, even if they lived elsewhere. This includes people who worked part of the year in South Carolina and part of the year in another state. You report only the income earned in South Carolina on your state return.

If you are claimed as a dependent on someone else's return, the filing threshold is lower. A dependent with unearned income (like interest or dividends) may need to file with income as low as $1,250. Check the South Carolina Department of Revenue website or your tax software for the exact threshold that applies to your situation.

Deductions that reduce your South Carolina taxable income

South Carolina allows you to subtract certain expenses from your income before calculating tax. The most common deduction is federal income tax paid — you can deduct the federal income tax you paid during the year, which lowers your state taxable income. This deduction does not apply to federal payroll taxes (Social Security and Medicare).

Contributions to traditional retirement accounts also reduce your taxable income. Money you put into a traditional IRA or a 401(k) plan is deducted from your income before state tax is calculated. Roth contributions do not may have access to for this deduction because they are made with after-tax dollars.

You can also deduct contributions to a South Carolina 529 college savings plan — up to $235,000 per beneficiary per year (as of 2024, subject to change). Military service members may deduct military pay under certain conditions. Self-employed people can deduct half of their self-employment tax, similar to the federal deduction.

Tax credits that directly reduce what you owe

A tax credit is different from a deduction. A deduction reduces your income; a credit reduces your tax bill dollar for dollar. South Carolina offers several credits that can lower your final tax amount. The dependent exemption credit provides a credit for each dependent child, though the amount is modest compared to federal credits.

The education credit covers tuition and fees paid to South Carolina colleges and universities. If you paid higher education expenses for yourself or a dependent, you may claim this credit. The property tax credit helps lower-income homeowners and renters by providing a credit based on property taxes paid or rent paid during the year.

South Carolina also offers credits for adoption expenses, donations to certain charities, and contributions to the state's tax credit scholarship program. The amount and availability of these credits change periodically, so check the Department of Revenue website or your tax software to see which ones apply to your situation.

How to file your South Carolina return

You file your South Carolina return using Form SC 1040, the state's individual income tax return. You can file on paper by mailing the form to the South Carolina Department of Revenue, or you can file electronically through the state's online system or through tax software that supports South Carolina returns.

Most tax software packages include South Carolina forms and will calculate your state tax based on the information you enter for your federal return. If you file your federal return electronically, you can also file your state return electronically at no cost through the state's website or through IRS Free File partners if you meet income limits.

Your South Carolina return is due on the same date as your federal return — typically April 15. If you file for a federal extension, you also get an automatic extension for your state return. However, if you owe state tax, you should pay by April 15 to avoid penalties and interest, even if you file the return later.

Frequently Asked Questions

Does South Carolina tax retirement income and Social Security?

Social Security benefits are not taxed by South Carolina. Retirement income from pensions, 401(k) withdrawals, and IRAs is taxed as regular income. However, if you are over 59½ and withdraw from a traditional IRA or 401(k), you may be able to exclude a portion of that income under South Carolina's retirement income exclusion — the rules are complex and depend on your age and total income.

What if I moved to or from South Carolina during the year?

You file as a part-year resident and report only the income you earned while living in South Carolina. If you moved out of state mid-year, you file a South Carolina return for the months you lived there and a return in your new state for the remaining months. Both states will want to see proof of when you moved, such as a lease or utility bill showing the move date.

Can I claim the same deductions on my South Carolina return that I claim on my federal return?

Not always. South Carolina allows federal income tax as a deduction, which the federal government does not allow. Some deductions differ — for example, South Carolina has its own rules for education credits and retirement savings deductions. Your state return may not be a simple copy of your federal return. Tax software usually handles these differences automatically.

What happens if I do not file or pay on time?

The South Carolina Department of Revenue charges penalties and interest on unpaid tax. A failure-to-file penalty and a failure-to-pay penalty both apply if you do not file by the deadline and owe tax. Interest accrues daily on the unpaid balance. If you cannot pay by April 15, you can request a payment plan or extension from the Department of Revenue.

Is there a South Carolina earned income tax credit?

South Carolina does not have its own earned income tax credit. However, if you have low to moderate income and work, you may be may have access to to the federal Earned Income Tax Credit (EITC), which you claim on your federal return. Some states add their own credit on top of the federal credit, but South Carolina does not currently offer one.